The fund would allow the cash-strapped Jet Airways to continue operations until the lenders agree to a restructuring plan for the airline, which has a debt of over Rs 8,000 crore
State Bank of India (SBI) and Punjab National Bank (PNB) have agreed to provide Rs 500 crore in emergency funding to Jet Airways on a condition that other lenders in the consortium do not object, The Economic Times reported.
The fund would allow the cash-strapped Jet Airways to continue operations until the lenders agree to a restructuring plan for the airline, which has a debt of over Rs 8,000 crore.
The details of the loan, however, are yet to be worked out.
"Only SBI and PNB have agreed to step in and provide the loans," a source told the paper, adding that none of the other lenders are willing to lend more.
"Its too premature to tell about that plan, bankers are already working on it," PNB MD Sunil Mehta told CNBC TV18.
Moneycontrol independently could not verify the report.
Fresh debt would be given the first preference in the event of a loan recovery, the source told the newspaper, adding: "Since it will be treated on a higher pedestal on the debt waterfall, it needs an okay from other lenders."
On February 14, Jet Airways' board approved a rescue deal that would make its lenders its largest shareholders and fix a near $1.12 billion funding gap.
Mehta said that a long-term resolution plan for Jet Airways is under discussion.
Under the proposed provisional resolution plan by Jet Airways' top lender -- SBI, banks may convert a part of the debt into 114 million shares by paying a token Re 1 apiece, based on Reserve Bank of India (RBI) restructuring guidelines. The move would give lenders majority shareholding (50.1 percent) in the company.
This plan, however, is yet to get the approval of other lenders. Its approval may get delayed due to the crucial emergency funding proposal.
The airline had recently posted its fourth consecutive quarter of losses in the October-December period. It posted a loss of Rs 587.8 crore in Q3 FY19 against a profit of Rs 165.2 crore in the same period last fiscal and loss of Rs 1,297.5 crore in the July-September quarter of 2018.